Oman’s Islamic banking industry ready to take flight

Oman’s Islamic banking industry ready to take flight

Daily Cover

OMAN: Islamic Finance news has learnt that the first licenses for Islamic banking windows in the sultanate are expected to be issued by the second week of January next year, following the release of its Islamic Banking Regulatory Framework (IBRF). Qaboos Said Al Said, the sultan of Oman, has already approved the draft regulations, which will now be followed by the Central Bank of Oman’s issuance of the new rules. “The earliest expected date of any formal license to be issued would be around the first or second week of January,” said a source. Six conventional banks have applied for Islamic window licenses, two of which comprise BankDhofar and BankMuscat. Oman’s first two fully-fledged Islamic banks, Alizz Islamic Bank and Bank Nizwa have commenced operations this year, after authorities last year announced their approval for Islamic banking in the sultanate. Meanwhile, Ernst & Young’s World Islamic Banking Competitiveness Report 2013 has warned that Islamic banks’ profitability continues to lag behind conventional banks operating in the same country. Therefore, could Oman’s Islamic banks struggle to compete with their conventional counterparts? Nonetheless, with strong royal and government support encouraging the rapid development of Islamic finance in Oman, 2013 could just be the year for the industry to take off in the sultanate.